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Aug 21, 2018

Tesla Board To Musk: Stop Tweeting!

President Donald Trump isn’t the only one facing calls to stop tweeting. Tesla Inc. (TSLA)
Chief Executive Elon Musk is getting the same advice from his board a
week after disclosing a go-private offer on the microblogging platform.
Citing people familiar with the matter, the New York Times reported board members at the electric car company are in damage control mode, with some directors saying that
Musk is out of control. They are growing more alarmed over Musk’s
behavior, with many blindsided by his move to tweet out that he has
secured the funding to take the company private in a $420-a-share deal.
Angered that the CEO’s tweets forced them to make a public statement
when the potential deal is in a very early stage, they urged Musk to
take a digital time out. One director went as far as to tell Musk to
focus on building cards and launching rockets instead of tweeting,
reported the New York Times. But it’s not just the board. The paper
noted employees and the company’s public relation shop have also urged
Musk to reign in his penchant for tweeting. That may tough for the CEO
to do. A recent analysis by the Wall Street Journal revealed Musk has
tweeted out comments about life, critics, and business ideas some 4,925
times. (See more: Musk's Tweets Blindsided Tesla Board Members: NYT.)

Musk Ignores The Advice

It's advice he hasn’t heeded since last week when he surprised Wall
Street, investors, and his own board, by disclosing the $420 a share
offer to take Tesla private.
He has since turned to Twitter to announce he has retained Goldman
Sachs and Silver Lake as advisers for that deal. That may give the board
more fodder given the Wall Street Journal reported Musk’s Goldman Sachs
tweet is premature. The two sides are still hammering out the fees
Goldman would get for advising on the deal.

Board Moves To Protect Themselves

In addition to reining in a CEO that some board members view as
reckless, the board is taking steps to protect themselves if there is
any backlash from the Musk go-private comments on Twitter. (See more: Tesla Forms Special Committee on Going Private.)
The Securities and Exchange Commission is looking into his tweets and
two class action lawsuits have already emerged against Tesla and its
CEO. The New York Times reported the independent directors have brought
on lawyers from Paul, Weiss, Rifkind, Wharton & Garrison LLP to
help with any fall out from the SEC due to the posts. The paper noted
the SEC inquiry is in the early stages but could become a full-blown
investigation.

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